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(previous question)


It is now January 1, 2019, and

one will need $1,000 on January 1, 2023, in 4 years. one bank compounds interest at an 8% annual rate.

If one want to make four equal payments on each January 1 from 2020 through 2023 to accumulate the $1,000, how large must each payment be? (Note that the payments begin a year from today.


(ACTUAL QUESTION)

It is now January 1, 2019, and you will need $1,000 on January 1, 2023, in 4 years. Your bank compounds interest at an 8% annual rate.

If your father offers to make the payments calculated in the previous question ($221.92) or to give you $750 on January 1, 2020 (a year from today), which would you choose? (option 1 or 2?

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